Budget 2025-2026: Key Features

Key Features of Budget 2025-2026

• Spurring agricultural growth and building rural prosperity is a key focus
• Key areas of focus are Garib (the poor), Youth, Annadata (farmers), and Nari (women)

Engines of Development

• Agriculture, MSME (Micro, Small & Medium Enterprises), Investment, and Exports
• Reforms and Inclusivity are guiding principles to achieve Viksit Bharat (Developed India)

Development Measures

• Prime Minister Dhan-Dhaanya Krishi Yojana aims to develop Agri Districts, covering 100 districts and potentially helping 1.7 crore farmers
• Enhanced Credit through KCC (Kisan Credit Card) facilitates short term loans for 7.7 crore farmers, fishermen, and dairy farmers with enhanced loan of ₹5 lakh
• National Mission on High Yielding Seeds targets development and propagation of seeds with high yield, pest resistance, and climate resilience
• A 5-year mission aims to facilitate improvements in productivity and sustainability of cotton farming
• A Makhana Board is to be set up in Bihar to improve production, processing, value addition, marketing, and organization of Farmer Producer Organizations (FPOs)

Aatmanirbharta in Pulses

• A 6-year Mission will focus on Tur, Urad, and Masoor
• Focus placed on development and commercial availability of climate resilient seeds
• Goals include increasing protein content, boosting productivity, and improving post-harvest storage and management to assure good prices for farmers

India Post as Catalyst

• Rural community hub co-location
• Includes institutional account services, DBT (Direct Benefit Transfer), cash out, and EMI pick-up
• Offers credit services to micro enterprises, insurance, and assisted digital services

Supporting MSMEs

• Credit Cards for Micro Enterprises: Customised Credit Cards with a ₹ 5 lakh limit for micro enterprises registered on Udyam portal.
• In the first year, 10 lakh such cards will be issued.
• Entrepreneurs Scheme: ₹2 crore term loans for up to 5 lakh first-time entrepreneurs, including women, Scheduled Castes and Scheduled Tribes

Manufacturing Goals

• Focus on ease and cost of doing business
• Prepare a future ready workforce for in-demand jobs
• A vibrant and dynamic MSME sector
• Improving availability of technology and quality products
• Supporting clean tech manufacturing for climate-friendly initiatives

Credit for MSMEs (Micro, Small & Medium Enterprises)

• Credit guarantee cover for MSEs (Micro and Small Enterprises) increased from ₹5 crore to ₹10 crore
• Credit guarantee cover for startups increased from ₹10 crore to ₹20 crore

Intensive Labor Sectors

• Focus Product Scheme for Footwear & Leather Sectors should employ 22 lakh, generate ₹4 lakh crore turnover with ₹1.1 lakh crore in exports
• Focus on Toy Sector clusters
• Improve skills, and a manufacturing ecosystem for high-quality, innovative, and sustainable toys representing the 'Made in India' brand
• National Institute of Food Technology establish in Bihar and enhance income for farmers and skilling.

MSME Revisions

• Micro enterprises: Investment revised to ₹2.5 crore, turnover to ₹10 crore
• Small enterprises: Investment revised to ₹25 crore, turnover to ₹100 crore
• Medium enterprises: Investment revised to ₹125 crore, turnover to ₹500 crore

Investing in People

• Saksham Anganwadi and Poshan 2.0 supports nutrition
• Capacity in IITs expands
• Establishing Day Care Cancer Centres in all District Hospitals
• Bharatiya Bhasha Pustak Scheme provides digital-form Indian language books
• Establish 05 National Centres of Excellence to improve skilling through global expertise
• Atal Tinkering Labs aims to establish 50,000 labs in government schools over 5 years
• Establish of a Centre of Excellence in Artificial Intelligence for education with ₹500 crore outlay
• Broadband connectivity for all government secondary schools and primary health centres in rural areas
• Expansion of medical education by 10,000 seats to reach 75,000 in 5 years
• Enhanced loans, UPI-linked credit cards and capacity building support for PM SVANidhi
• Registration on the e-Shram portal & healthcare under PM Jan Arogya Yojana for welfare of online platform workers

Infrastructure

• ₹1.5 lakh crore outlay to state governments for capital expenditure and incentives for reforms, as well as 50-year interest free loans
• The Jal Jeevan Mission extended to 2028, aims to achieve 100% coverage
• Power Sector Reforms incentivize distribution reforms and augmentation of intra-state transmission
• Additional borrowing of 0.5% of GSDP to states, contingent on these reforms

Plans

• Asset Monetization Plan 2025-30 aims to generate ₹10 lakh crore in new projects
• Maritime Development Fund will provide a ₹25,000 crore corpus for long-term financing, with up to 49% government contribution
• Urban Challenge Fund will provide ₹1 lakh crore to implement proposals for 'Cities as Growth Hubs', 'Creative Redevelopment of Cities' and 'Water & Sanitation'
• Nuclear Energy Mission for Viksit Bharat entails amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act, promoting active partnership with the private sector
• UDAN (Ude Desh Ka Aam Nagrik) regional connectivity aims to connect to 120 new destinations for 4 crore passengers in 10 years
• ₹15,000 crore allocated for expeditious completion of one lakh dwelling units through SWAMIH Fund-2
• Development of Top 50 tourist destination sites in partnerships with states
• Streamlined e-visa facilities, intensive skill development, performance-linked incentives, MUDRA loans and improved travel connectivity create employment led growth via tourism

Research & Development

• PM Research Fellowship: Ten thousand fellowships for technological research in IITs and IISc
• Allocating ₹20,000 crore to implement private sector driven Research, Development and Innovation
• The 2nd Gene Bank with 10 lakh germplasm lines for future food/nutritional security
• Gyan Bharatam Mission: Documentation and conservation of our manuscript heritage, to cover more than 1 crore manuscripts
• Using PM Gati Shakti will modernize land records, urban planning, and design of infrastructure projects for National Geospatial Mission

Export Improvements

• Facilitate credit access, cross-border support, and support to MSMEs to tackle non-tariff measures via an Export Promotion Mission
• BharatTradeNet (BTN) creates a digital platform for trade documentation, financing, and integration with Global Supply Chains
• Establish a National Framework for GCC as guidance to states in emerging tier 2 cities
• Upgrade infrastructure and warehousing for air cargo including high value perishable horticulture produce

Reforms

• 'Grameen Credit Score' framework serves credit needs of SHG members and people in rural areas
• NaBFID to set up a 'Partial Credit Enhancement Facility' for corporate bonds for infrastructure
• Revamped Central KYC registry will be rolled out in 2025
• Process rationalisation for speedy company mergers
• FDI limit for the insurance sector will be raised from 74 to 100 per cent

Tax and Regulatory Reforms

• Changes in direct taxes and proposal to introduced the New Income Tax Bill
• High Level Committee for Regulatory Reforms
• Evaluate States with the Investment Friendliness Index of States
• FSDC Mechanism to evaluate the impact of current financial regulations along with a framework to enhance their responsiveness
• Jan Vishwas Bill 2.0 to decriminalize more than 100 provisions in various laws.

Indirect Tax

• Rationalisation of Customs Tariff Structure for Industrial Goods
• Eliminating 7 different tariff rates
• Applying one cess or surcharge
• Applying equivalent cess to items effectively and lower cess on certain items.
• Various exemptions and extensions for open-cell components of LED/LCD TVs, textiles, lithium batteries, and EVs to promote Make in India
• Promotion of MRO by exempting goods for shipbuilding and ship breaking for 10 years, as well as extending the time limit for export of railway goods that were imported for repairs
• Export promotion by providing duty-free inputs for the handicraft and leather sectors
• Time limit fixed for finalization of provisional assessment
• Voluntary declaration of material facts post clearance and duty payment with interest but without penalty
• IGCR Rules amended to extend time limit to 1 year and file quarterly statement instead of monthly.

Improved Access to Medicines

• Addition of 36 lifesaving drugs/medicines in exempted list
• 6 medicines in 5% duty list
• 37 medicines and 13 new patient assistance programmes in exempt list
• (Medicines for rare diseases, cancer, severe chronic diseases)

Direct Tax Proposals

• Introduce a scheme for determining the arm's length price of an international transaction for a block period of three years to improve international taxation
• Scope expansion of safe harbour rules reduces litigation
• Rationalization of TDS/TCS for easing difficulties
• Tax deduction limit for senior citizens doubled from ₹ 50,000 to ₹ 1 lakh
• The annual TDS on rent limit increased to ₹ 6 lakh from ₹2.40 lakh
• Updated returns can be filed up to four years, from two years
• Small Charitable trusts/institutions can apply for registration from 5 to 10 years
• Tax payers to be allowed to claim the yearly value of 02 self occupied properties (previously 01) without any conditions (previously conditions attached)

Economy Growth

• Introduces tax certainty for electronics manufacturing schemes
• There's also a Tonnage Tax Scheme for Inland Vessels
• 5 year extension for Start-Up incorporations
• Specific benefits to ship-leasing units, insurance offices and treasury centres of global companies set up in IFSC
• Provides taxation certainty to Category I and Category II AIFs, undertaking investments in infrastructure and other such sectors

Rupee Flow

• Rupee Comes From: Income tax (22%), Borrowing and other liabilities (24%), Union excise duties (5%), GST and other taxes (18%), Corporation tax (17%) and Non-tax receipts (9%)
• Rupee Goes To: Interest payments (20%), Central Sector Scheme (16%), States' share of Taxes and Duties (22%), Defence (8%), Major Subsidies (6%), Centrally Sponsored Scheme (8%) and Other Expenditure (8%)

Receipts

• Revenue: 2023-24 (Actuals) at 27.3 lakh crore, 2024-25 (BE) at 31.3 lakh crore, 2024-25 (RE) at 30.9 lakh crore, 2025-26 (BE) at 34.2 lakh crore
• Capital: 2023-24 (Actuals) at 17.1 lakh crore, 2024-25 (BE) at 16.9 lakh crore, 2024-25 (RE) at 16.3 lakh crore, 2025-26 (BE) at 16.4 lakh crore

Expenditure

• Effective Capital: 2023-24 (Actuals) at 12.5 lakh crore, 2024-25 (BE) at 15.0 lakh crore, 2024-25 (RE) at 13.2 lakh crore, 2025-26 (BE) at 15.5 lakh crore
• Revenue Expenditure: 2023-24 (Actuals) at 34.9 lakh crore, 2024-25 (BE) at 37.1 lakh crore, 2024-25 (RE) at 37.0 lakh crore, 2025-26 (BE) at 39.4 lakh crore

Deficit Trends

• Fiscal deficit as percent of GDP is gradually decreasing from 6.7% in FY 2021-22 to 0.8% in FY 2025-26

Expenditure of Major Items (in ₹ Crore)

• Defence: 4,91,732
• Rural Development: 2,66,817
• Home Affairs: 2,33,211
• Agriculture and Allied Activities: 1,71,437
• Education: 1,28,650
• Health: 98,311
• Urban Development: 96,777
• IT and Telecom: 95,298
• Energy: 81,174
• Commerce & Industry: 65,553
• Social Welfare - 60,052
• Scientific Departments - 55,679